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> Visa and its smaller rival Mastercard have surged over the past two decades, reaching a combined market cap of roughly $1 trillion. In the US there actually
by cubefox 2y ago
> Visa and its smaller rival Mastercard have surged over the past two decades, reaching a combined market cap of roughly $1 trillion.
In the US there actually exists (begins to exist) now a cheaper alternative to credit card payments: FedNow. See https://en.wikipedia.org/wiki/FedNow https://en.wikipedia.org/wiki/FedNow
It's an instantaneous bank transfer, without a credit card company in the middle extracting rents.
For dodgy/disreputable online shops, credit cards will still be better, due to the possibility of chargeback. And of course for actually buying things on credit. But for most regular cases, this shouldn't be necessary.
Systems like FedNow are already highly successful in India (UPI) and several other countries.
- evilfred 2y agoFedNow is for institutions not individuals
- cubefox 2y agoNot true
- wslh 2y agoPix [1] is super successful in Brazil though. [1] https://en.wikipedia.org/wiki/Pix_(payment_system)?wprov=sfti1 https://en.wikipedia.org/wiki/Pix_(payment_system)?wprov=sft...
- drawnwren 2y agoPix is so prevalent in Brazil that it's quite inconvenient to do even simple transactions there without the requisite ID because they expect everyone to just have it.
- cubefox 2y agoI think you mean "also", not "though". (UPI in India was just one example.)
- vouaobrasil 2y agoYeah, one of the few things that Brazil has over North America is Pix.
- mmooss 2y agoCan ordinary people use FedNow right now? How?
- financetechbro 2y agoYou would need to go through a participating bank or fintech
- nobody9999 2y ago>Can ordinary people use FedNow right now? How? IIUC, your (and the counterparty's) financial institutions will need to participate[0] in the FedNow program. My bank (one of the big ones) does not participate. Which isn't too surprising as they issue lots of credit and debit cards, with which FedNow directly competes. Hopefully, one of these days FedNow will be ubiquitous. While I'm not holding my breath, I'm also optimistic that it can and will work. [0] https://www.frbservices.org/financial-services/fednow/organizations https://www.frbservices.org/financial-services/fednow/organi...
- loeg 2y agoFedNow is cool but it has nothing to do with B2C payments. Think: wires, but cheaper. Or ACH, but faster. Do you frequently pay for goods or services with wires or literal ACH transfers? (No.)
- jasonjayr 2y agoNo, but only because the technology + processes for Wires + ACH are pretty complicated and slow. If they can be sped up, simplified with the same or better protections for account holders, then it would would be a game changer. Of course Visa/Mastercard/Amex/Discover are very well moneied interests, positioned pretty tightly in the market and have no incentive to help it's success along.
- loeg 2y agoI think it's likely people will build useful user experiences on top of FedNow. Or migrate existing uses (Zelle?). But it's just the boring settlement system in the background; not what end customers or businesses interact with directly.
- DesiLurker 2y agoZelle is an alternate payment schema by consortium of major banks. It was introduced a little head of time just to avoid fednow from gaining traction. I'll bet a few years from now they'll attack fednow for being bloated and unused and lobby to marginalize it. Fednow basically means no more overdraft fee. they wont let that happen.
- tyre 2y agoAs a consumer, I also have no incentive to help FedNow. Unless they are offering cash back on my taxes.
- throwaway48476 2y agoVisa charges 3%. Everything you buy could be 3% cheaper, that's better than cash back.
- alemanek 2y agoPretty much all of South America has some version of this as well. Colombia has “transferencia” which is awesome and even as a foreigner I could pay someone using cash at an ATM machine.
- brookst 2y ago> without a credit card company in the middle extracting rents. This is way too reductive. In the US, credit cards are complicated. For instance, I get about 2.5% of every purchase back, either in cash or kind. Yes, the merchant pays 4%, and VISA/matercard take a bit, and my issuing bank takes a bit, but calling that "extracting rents" feels like pure rhetoric. FedNow is awesome and will make the market more efficient, but merchants aren't going to lower prices due to lower fees, especially while there's a mix of fee-less transactions and credit card transactions. At least in the short term, adopting FedNow is just giving money to the places you buy from (for retail transactions).
- jessriedel 2y agoThat you are getting a kickback does not mean they aren’t extracting monopoly rent. The rents, and your kickback, is in fact supported by slightly higher prices, which for you will roughly cancel out, but which are paid in full by people not using credit cards. One can certainly argue that this system is net positive due, e.g., to greater credit availability for people who need it, chargeback discipline, etc. It’s a very complicated system that impacts a bunch of stuff. But it being merely a ~3% surcharge (on most retail transactions nationwide!) does not deflect the monopoly charge.
- wlesieutre 2y agoAnd anyone that ever uses cash for anything is overpaying, because prices everywhere have been jacked up to include headroom for "give back 2.5% as credit card rewards"
- AngryData 2y agoWell for corporate stores yes. Still a good number of rural area small businesses that give a discount for cash, or only accept cash.
- sandmn 2y agoProcessing cash might cost retailers even more than cards (miscalculations, keeping change, counterfeit bills, cash collection every day) unless it allows them to evade taxes.
- segmondy 2y agoThe key thing to remember about credit cards is "credit", "CREDIT" You can have literally no money to your name but if you have a credit card, you can spend up to whatever the balance is. Someone is loaning you money, someone is taking risk that you will pay. You are protect by government regulation so that if you file a dispute, you are protected until it's proven that you actually did spend the money. With debit card or FedNow, you need to have the money, you don't have dispute protections.
- ensignavenger 2y agoThere is no reason why a bank couldn't allow customers to use FedNow to access a revolving credit line.
- KingMachiavelli 2y agoSure but AFAIK FedNow is not going to hold funds or authority to payback or revert "fraudulent" transactions? If I lend out $X dollars but my client says the loan was accessed fraudulently then who pays for this loss? The bank, the payment processor (FedNow/Visa), the customer, or the vendor?
- ensignavenger 2y agoThe bank usually handles initiating reversals, not the payment processor. Though FedNow may not have the API to facilitate them easily, not sure on that.
- usehackernews 2y agoThese are called ACH return codes and are similar to disputes on credit card. Liability is on the receiving or the originator institution. But in practice, it depends on the contract with the “processor”. Many Pay By Bank “processors” offer a guarantee model to cover these returns. Otherwise, liability is typically on the merchant. However, Nacha is beginning to iterate on their return codes to better fit the e-commerce use case and clearly define liability.
- 2y ago
- HAL3000 2y agoThe US seems to be so far behind. For example, in Poland, Europe, you've had online instant bank payments for over 10 years. You’d go to a merchant’s site, click 'pay with my bank,' and an OAuth-like mechanism would log you into your bank to confirm the payment. Now it’s even easier with the introduction of BLIK, which lets you pay in shops, online, etc. Online payments are super simple: you click 'pay with BLIK' on a merchant’s site, go to your bank app (web or mobile), click the BLIK icon, and get a six-digit code valid for 60–180 seconds. You enter that code on the merchant site, and your mobile app shows 'Do you want to pay [xxx amount] to [merchant Y]?' You click yes, and that’s it.
- hnav 2y agoRegulatory hurdles from incumbents aside, it's generally the case that a less developed, up-and-coming economy will have new stuff quicker. The US is arguably the birthplace of credit but was one of the last to get chip and then tap. Right now the US is putting internet relays in low earth orbit and teaching computers to generate text on the fly, but the wired internet offerings are inferior to some third tier city in Bulgaria and customer service is abysmal.
- markus92 2y agoSEPA is well established all across the eurozone though, even in countries with considerable legacy infrastructure.
- hnav 2y agoRight but those countries are comparable in size and GDP to US states. The US had wire transfers since the 19th century, credit cards as we recognize them today since the 70s, online shopping since the 90s and online money transfer like Paypal since the 2000s. That eurozone countries would want to standardize on something and happen to largely escape regulatory capture is fairly predictable.
- jltsiren 2y ago
- inkyoto 2y agoThe lawsuit is not about credit cards or instant electronic fund transfers. Visa (and MasterCard as well) have colluded with banks in multiple countries (not just in the US) to eradicate national debit card payment networks that cost consumers either $0 or a very small flat fee per a transaction (e.g. $0.10) and replace them with their own branded debit cards that attract fees for the consumer, for the merchant and generate revenue for the payment network. The revenue is tiered (e.g. premium debit cards attract higher interchange fees that go directly to Visa/MC), hence the proliferation of Platinum debit cards. And consumers are now left with debit card transaction surcharges that have been passed on to them whereas Visa is profiteering from every single party involved in the end to end payment processing. National debit card payment networks are now dead, courtesy of Visa/MC.
- eweise 2y agoMost banks just receive, not send via fednow so not possible to use right now.
- pbreit 2y agoFedNow will not become an alternative to consumer payment cards anytime soon, if ever. Visa & Mastercard work very well for payments between strangers.
- lxgr 2y agoIt's not a complete payment scheme by itself, as it's missing dispute resolution (a prerequirement for payments between strangers). But who says that the same party has to offer payment rails and dispute protection? There are successful models of the two being decoupled in some markets (e.g. various providers offering fraud/chargeback insurance on top of SEPA Direct Debit in Europe).
- cubefox 2y agoDispute resolution isn't required in most cases anyway. It's already a lot safer than cash, because a permanent record proves the payment did occur. Also, chargeback insurance, in expectation, does cost the user more than he saves.
- chgs 2y agoWhat’s the dispute protection with cash?
- lxgr 2y agoNone, which makes it a pretty suboptimal payment method for some transactions. I'd never buy an airline ticket in cash, for example: If the airline were to go bankrupt (which has affected me more than once in my lifetime), I'd have no recourse.
- xyst 2y agoWill take years for banks to adopt FedNow. Regional banks and credit unions probably a decade out. Then another cycle of adoption by merchants and buyers (4-5 yrs).
- whimsicalism 2y agowhat’s even the point of using a regional bank for personal use?
- 39896880 2y agoI searched for a FedNow app and couldn’t find it. So, it doesn’t appear to actually exist for use by someone who just wants to send money to another person now.